A growing number of Arizona small and midsize businesses are considering crossing the pond to increase their profits.

Foreign trade experts say the United Kingdom is a good springboard for Arizona's products and services into the larger European Union markets, whose 25 member countries comprise 500 million consumers.

Conversely, U.K. companies see doing business in Arizona as an advantage for entry into the Latin American markets, especially Mexico.

As Arizona's sixth-largest trading partner for the first nine months of 2004, the U.K. is an important overseas market. However, that ranking gradually has fallen from third for all of 2001.

The U.K. includes England, Scotland, Wales and Northern Ireland, and encompasses about 60 million people.

Mark LaScola is managing principal for On The Mark Inc., a small, Phoenix-based consulting firm that helps companies reorganize and strategize for entering the global marketplace. He works with other American businesses that have set up offices in the United Kingdom.

More businesses are using his services to retool their structures and mindsets for doing business with the U.K., he said.

His own business grew by 53 percent in 2003, to $1.2 million over the year before, when he started consulting on U.K. business.

Hank Marshall, director of the British Trade and Investment Office in Phoenix, said that of the 50 Arizona companies that worked with his office last year, 25 have entered into relationships with U.K. firms.

His office educates company owners on U.K. business laws and acts to screen possible trade partners.

Marshall said 2001 was a peak year for exports to Britain because of the value of military helicopters Arizona companies were selling to the U.K. government.

Those contracts ended, sending the export numbers into decline. Unless the exports climb because of big-dollar deals with Arizona biotech companies, it may not reach those high levels again anytime soon, he said.

However, even while interest is rising in U.K.-Arizona trade, the British government put up an obstacle when in December it announced it will close its Phoenix trade and investment office.

Marshall said the move is a cost-cutting measure, and regional offices shut down in Phoenix and Dallas will be consolidated in Los Angeles.

The closing date has yet to be determined, and the office's services will be available until then.

Gail Howard, international investment adviser to Gov. Janet Napolitano, said loss of the trade office doesn't affect any of the ongoing business projects the state has with the U.K.

Nor has the governor's enthusiasm for trade with the U.K. been dampened, she added. Last summer, she led a trade mission to Great Britain.

Biotech was the focus with hopes of connecting the Translational Genomics Research Institute with large pharmaceutical companies there.

Other British industries also like Arizona for doing business. Rio Tino Zinc, the parent company of Resolution Copper Co., is considering building an underground mine in Superior with an initial investment of $200 million. The project would produce 400 permanent technician positions and about 1,000 construction jobs.

Despite the recent setback of losing the trade office and declining exports from Arizona, legal and tax experts say there are good opportunities.

"The business atmosphere there is very welcoming and easy to adapt for a United States business which hasn't been involved in foreign trade before," said Keith Galbut, an associate with Galbut & Hunter law firm in Phoenix.

The firm specializes in business and immigration law, and clients include small to large businesses operating in global markets.

He cited an English-speaking, skilled work force and a similar and transparent business legal system as advantages.

Debra A. Callicutt, director of international tax with Henry & Horne PLC in Scottsdale, said once Arizona businesses have made a decision to open a branch in the U.K., they need advice on what types of legal structures offer the best tax advantages.

The United Kingdom has a tax treaty with the United States, and cooperation between the two countries makes doing business there easier, she said.

Get connected

Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.